Baraka’s share of production from La Punta-1 is 8.28% of the total daily crude production of approximately 1,400 b/d (100%). This follows confirmation from TC Oil Ltd (Operator) of the receipt of Baraka’s initial payment of US$1.5 million as part of the Assignment Agreement.
In addition to its share of daily crude production, Baraka is receiving 25.75% of the liquid-stripping gas business at La Punta. This represents approximately 49 bbls/d of LPG and 21 bbls/d of Nafta respectively (Baraka share).
The total cost to Baraka of the entry into the La Punta oilfield is US$10.5 million. The remaining payments are US$2.5 million in cash, US$1.3 million for a 45 sq. km 3D seismic program, US$4.5 for drilling and completing the La Punta-2 well, due to be spudded in February 2008, and $1.2 million for facilities upgrades.
A busy schedule of activities is planned at La Punta. The 3D seismic survey is expected to commence shortly followed by planning for the drilling of the La Punta-2 well. La Punta-2 is expected to commence drilling in February 2008 with the well hooked-up and facilities upgrade completed in time for production by April 2008. The economic benefit to Baraka of the La Punta acquisition is significant. Baraka’s share of La Punta-1 and La Punta-2 oil resources is estimated to be approximately 0.3 million bbls with a further 2.8 million bbls exploration potential (unrisked). The expected payback of Baraka’s investment in La Punta is only 16 months.
Managing Director and CEO Dr. Mark Fenton said "This is an extremely important step for Baraka. The Company can now consider itself an E & P Company."
"Commencement of production from La Punta represents the first step in the Company’s transition from junior explorer with large frontier exploration acreage towards an E & P Company with a balanced portfolio of production, development and exploration assets."
To support the La Punta acquisition, the Company has made a Share Purchase Plan (SPP) offer to its shareholders. Shareholders will shortly receive the SPP documentation. Shareholders are reminded that to participate in the SPP they must complete the application form, attach a check for the relevant amount and return them to the address listed on the form by November 7, 2007.
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